MicroStrategy Could Be Invited to Join Nasdaq-100 Today -- WSJ

Dow Jones12-13

By Alexander Osipovich

Crypto investors are watching whether MicroStrategy gets added to the Nasdaq-100 today, in what would be a milestone for the software company that has transformed itself into a bitcoin-buying machine.

Nasdaq is set to unveil new constituents for the index at 8 p.m. ET. Being included in the index could benefit MicroStrategy because exchange-traded funds that track the Nasdaq-100 must buy its shares. There are more than $350 billion of assets under management in such ETFs.

While the changes to the Nasdaq-100 won't take effect until Dec. 23, news about index inclusion can boost companies' stock price.

If MicroStrategy gets added, it would put a stock known for extreme volatility into one of the market's best-known indexes, alongside tech giants such as Apple and Nvidia.

MicroStrategy, led by Chief Executive Michael Saylor, has adopted an unorthodox strategy of repeatedly raising money through convertible bond sales to fund bitcoin purchases. Due to the cryptocurrency's rally, MicroStrategy stock has surged more than 500% this year. But it is highly sensitive to day-to-day fluctuations in bitcoin prices, and even some crypto investors argue that it is overvalued.

The Nasdaq-100's primary criterion for inclusion is market capitalization, and MicroStrategy appears to be large enough to make the cut. At the end of November, MicroStrategy had a market cap of $87 billion. That would have made it the 41st largest company in the index, just ahead of PayPal, according to Dow Jones Market Data.

Bitcoin is the only reason why MicroStrategy is a contender for the index. While the company's software business has stagnated, its market cap has exploded by a factor of nearly 90 times since it started buying bitcoin in August 2020.

The index is only open to nonfinancial companies. Some observers have noted that MicroStrategy could be seen as a financial company, given its main business is amassing bitcoin. But under the classification system that Nasdaq uses, MicroStrategy is considered a software company.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

December 13, 2024 10:52 ET (15:52 GMT)

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MicroStrategy Could Be Invited to Join Nasdaq-100 Today -- WSJ

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